COMMISSIONER OF INCOME TAX Vs. GODAVARI DRUGS LTD

JUDGEMENT

(1.) THIS is another case, in which we get an occasion to deal with certain facets of Section 80HHC of the Income Tax Act, 1961 (for short the Act)

(2.) THE respondent is an exporter and is assessed to income tax. It has been submitting returns year after year, claiming benefits under the relevant provisions of law. For the assessment year 1994 -95, it claimed deduction under various heads. An order of assessment was passed on 28.02.1997. The claims of the respondent, referable to Sections 80HH, 80HHC and 80I of the Act were not accepted by the Assessing Officer. An appeal was filed before the Commissioner (Appeals). That was also rejected on 15.09.2000. Aggrieved by that, the respondent filed I.T.A.No.757/Hyd/2000 before the Hyderabad Bench of the Income Tax Appellate Tribunal. The Tribunal allowed the appeal through a detailed order dated 24.01.2003 and accepted the claims of the respondent. Hence, this further appeal under Section 260 -A of the Act, by the Revenue.

(3.) SRI J.V.Prasad, learned Standing Counsel for the Department submits that the Assessing Officer has taken the correct view of the matter in the context of excluding the interest earned on deposits made in relation to activity, referable to Section 80HH and 80I of the Act, but the Tribunal held that such interest qualifies for deduction under those two provisions, without even verifying the source thereof. He further submits that the respondent was not able to point out that the interest yielding deposits were made in connection with the business activity referred to in Sections 80HH and 80I of the Act. Learned Standing Counsel further submits that the respondent became eligible for Import Duty Entitlement Benefit (IDEB) to the extent of Rs.3,67,25,867/ - for the concerned assessment year and the same was liable to be added to its total turnover and though the Commissioner has assigned cogent reasons for such inclusion, the Tribunal reversed the finding without any proper basis. It is urged that the differentiation between the accrual on the one hand and the actual utilisation thereof on the other hand, is hardly relevant in the context of the application of Section 80HHC of the Act and that the order passed by the Tribunal in that behalf deserves to be reversed.